Yahoo rejects Microsoft offer

iMav said:

the merger opens a huge amount of locked possibilities for us the consumer; live is now becoming an integrated part of windows OS and that is what MS is trying to achieve Live is becoming an extension of Windows OS with yahoo along with MS a lot of us wont have to handle multiple ids and accounts as separate identities just like the whole microsoft website network can be accessed using the same hotmail account a merger with yahoo would mean something similar the ease of using Flickr or our yahoo accounts and even the yahoo finances, if 1 sees yahoo and MS Live have almost everything overlapping which makes the integration of services for the consumer simpler. chances are this merger will happen and then we will have some really solid competition in the online space as opposed to google's monopoly. MS already owns a huge part of facebook (orkut) utube (msnvideo service) and now the new yahoo live service all of this will definitely help us as we wont have to have separate accounts to use flickr and separate accounts to use youtube we will have better alternatives and ease of use as it will integrate with windows itself

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amd64_man2005 said:

youtube is google's dude...

but ya..the possiblities are huugee

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iMav said:

dude iv told u this before please never start or partner a business coz u have no idea how business is done

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Zeeshan Quireshi said:

Ya he might not have problem with Lakshmi Mittal buying out Arcelor by a Hostile Bid .

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The_Devil_Himself said:

yahoo just wants to milk more money.lets see how desperate M$ is to fight google.

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slugger said:

i think MS will first try the second option, and if the boards still rejects it, then it will make an attempt for a hostile takeover

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Yahoo big investors may back Microsoft

Most of Yahoo Inc's (YHOO.O) top institutional shareholders may be more interested in making sure Microsoft Corp (MSFT.O) does not overpay for the Web pioneer, because they have more money invested in the bigger software maker, a research report said on Friday.

Financial risk management analysis company RiskMetrics Group found that close to 90 percent of Yahoo's institutional shareholders have a cross-holding in Microsoft, including most of the top 20 -- and generally have significantly more money invested in Microsoft.

The two companies are at a stand-off in Microsoft's $41.7 billion unsolicited bid to acquire Yahoo. Microsoft has offered to buy Yahoo for $31 a share in cash and stock, a bid which Yahoo's board rejected, saying it undervalued the company.

Microsoft countered by saying that its offer was "full and fair," but did not say what it planned to do next. Analysts expect Microsoft to sweeten its bid, possibly to $35 a share, to clinch a deal.

Yahoo shares surged on news of the bid, but Microsoft shares have fallen. Shares of Microsoft were down 11 cents to $28.39 in Friday afternoon trading on Nasdaq, down 13 percent since the offer went public.

Yahoo's stock was down 40 cents to $29.58, representing about a 2 percent premium to Microsoft's half-cash and half-stock offer, which indicates investors are expecting a higher bid.

A shareholder that owns both the target and an acquirer will be more interested in the net benefit of a deal, RiskMetrics said. Shareholders with more money invested in Microsoft than Yahoo will most likely urge Yahoo not to push its case too hard.

"They may be more concerned with whether Microsoft will get caught up in a 'deal frenzy' and suffer the 'winner's curse' by overpaying for Yahoo," RiskMetrics analysts wrote in an M&A Edge Note.

"We can expect shareholders who own both companies to pressure Yahoo directors to extract a material sweetener from Microsoft (which will help Yahoo directors save face) that isn't seen to destroy the perceived benefits of the merger, prior to ... ultimately succumbing."

Earlier this week, Yahoo's second biggest shareholder, Legg Mason (LM.N), urged Microsoft to raise its offer. In a letter to investors, Bill Miller, the star stock-picker at the U.S. asset manager, estimated that fair value for Yahoo was around $40 per share.

RiskMetrics said this was not a big surprise since Legg Mason is one of three of Yahoo's top 20 institutional shareholders with significantly more money invested in Yahoo than Microsoft.

"Don't expect to see many of the other top Yahoo shareholders following Bill Miller's lead," the report said.

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iMav said:

chances are this merger will happen and then we will have some really solid competition in the online space as opposed to google's monopoly

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In an escalation of its fight for Yahoo, Microsoft will authorize a proxy fight at the Internet company this week, people briefed on the matter told DealBook. Unless Yahoo quickly reverses course and enters into talks, Microsoft would then seek to nominate a slate of directors to Yahoo’s board by March 13, the final deadline for nominations, and pursue a lenthy campaign to oust the board.

The move, expected to cost about $20 million to $30 million, was Microsoft’s alternative to raising its $44.6 billion bid and is seen as a less expensive way to put pressure on Yahoo’s board. Yahoo rejected Microsoft’s original offer as undervalued.

It is only the latest twist in one of the biggest Internet takeover battles in recent years. Since unveiling its aggressive offer, Microsoft has hinted that it would pursue all avenues to lock up Yahoo as it races to catch up to Google.

As the software giant’s stock has fallen 12.8 percent since announcing the offer two weeks ago, so has the nominal value of the deal, to about $41 billion. Many Yahoo shareholders, including Bill Miller of Legg Mason, have said that Microsoft must raise its bid to strike a deal.

But raising the $31-per-share offer would cost Microsoft an additional $1.4 billion for every dollar added.

‘’We sent them a letter and said we think that’s a fair offer. There’s nothing that’s gone on other than us stating that we think it’s a fair offer,'’ Bill Gates, Microsoft’s chairman,
told The Associated Press on Monday. ‘’They should take a hard look at it.'’

By contrast, waging a proxy fight to oust Yahoo’s directors is comparatively cheaper. Much of the cost involves the hiring of a proxy solicitor and preparing mailers for Yahoo shareholders.

Furthermore, Yahoo’s board is vulnerable in a proxy fight. As The Deal Professor has remarked previously, Yahoo does not have a staggered board, so all of its directors are up for nomination this year. And, per section 3.3 of the by-laws, in a contested election, directors are elected by a plurality of votes cast.

DealBook and The Deal Professor have noted previously that Microsoft’s aggressive approach has long left the door open to this move. But some observers said that the software company would prefer a friendly deal, especially given the possibility of Yahoo employees leaving en masse if a bitter takeover fight erupts.

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